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FREELANCING IN GERMANY
In Germany, a freelancer is defined as a person who exercises the free professions independently, without functioning as a business, partnership, or being employed with a full-time, part-time or remote contract. The country has updated its laws and created rules so that freelancers would also be included and calculated in country’s work system, the country has opened its doors to foreigners that want to move to Germany and work as a freelancer, while freelancing is simplest of working, in order to move to Germany to work as a freelancer he or she must meet the rules of the German Federation.
Freelancers VS regular employees in Germany
An employee has to register as an employer and pay social security, income tax and employer liability. At the same time the employ will benefit from protection for termination. Freelancers, on the other hand, are not protected from termination and have to take care of health insurance etc. by themselves. Also, while an employee will receive their salary on a regular basis, a freelancer needs to first provide proper invoices in order to get paid.
Opportunities for freelancers in Germany
Types of freelance jobs in Germany:
- SAP
- Business consulting and Management
- IT
- Engineering
- Development
- Graphic Design, Content, and Media
Freelancing marketing in Germany
According to a survey of freelancer-kompass-2020, The best type of freelancing jobs in Germany are in IT and Technology sector, the average hourly rate for these type of freelancers in 2020 was EUR 94.28.More than half (57%) of IT freelancers earned a gross income (before taxes) of over EUR 100.00, after taxes, 57% of freelancers earned a net income of over 50.000.Furthermore, almost 31% of freelancers earn between EUR 5.000 – 7.000 per month net salary.
Top 5 Major challenges freelancer faces
According to a survey of freelancermap.com 2020, these are the major challenges and freelancing problems:
- Landing clients - About 68% of freelancer chose landing clients as the biggest issue in their career.
- Work-life balance - Nearly, one-third of the freelancer struggle with their work-life balance.
- Getting better pay rate - Many freelancers faces problem in increasing their pay rate. Many freelancer jobs are part of the competitive markets, which means there are a lot of people trying to undercut your prices.
- Staying productive - More than 15% of the participants said they struggle most with maintaining productivity.
- Accounting - Freelancing involves a lot of paperwork and requires time to manage invoices, chase payments, submitting taxes. Accounting in particular, was cited as a big challenge for 21% of freelancers.
Paying Taxes as a freelancer
Freelancers are exempt from paying Trade Taxes in germany they are still subjected to pay Income Tax and Value Added Tax:Income Tax. Germany has a base rate of 14% of the income tax, which can go up to 42%. A surcharge of 5.5% is also included in this tax. Freelancers will need to pay this tax on a quarterly basis. Those making less than EUR 9.169 are exempt from the income tax.Value Added Tax. Freelancers need to prepare VAT declarations periodically, declaring their revenue. Freelancer usually pays 19%, but it could be as low as 7% depending on the services.
Getting Health Insurance in Germany
Health Insurance is mandatory for every person moving to Germany, including freelancers. Freelancers have the opportunity to choose whether they want to take public or private health insurance, but it is bit trickier for freelancers, while those are not freelancer or self-employed usually pay half of their insurance and freelancers have to pay all their insurance on their own.
